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Small & Midsize Businesses Are Spending The Majority Of Their Marketing Budgets On Email

According to a study commissioned by iContact, small and midsize businesses are allocating the largest share of their marketing budgets to email, with more than half spending up to 20 percent of their total marketing dollars on email marketing efforts.

Edge Research was commissioned by iContact, an email service provided by Vocus, to conduct an independent study surveying 601 email marketing decision makers at companies with an annual revenue of $1 million to $50 million and no more than 1,000 total employees. Respondents had to be involved in email marketing decisions, have knowledge of how their marketing budget was distributed, and belong to an organization that owned their own list and used an email service provider.

The study discovered that email marketing received, on average, 15 percent of an SMBs marketing budget, with more dollars going to email than any other marketing tactic.

Reasons for Using Email Marketing

While there are a number of reasons companies use email marketing, 92 percent of the respondents confirmed that they use email to share news about new products or services. The least likely reason to send an email was to respond to news stories about their organization. Even though only 59 percent of companies used email to respond to news stories, 70 percent of those companies were organizations with $30 million or more in revenue, mostly because large organizations are more likely to be in the news.

Subscriber Lists and Email Frequency

Of the companies surveyed, the median email subscription list size was nearly 3,500 subscribers. One-quarter of the companies had fewer than 1,000 subscribers and one-fifth of the companies had more than 10,000 subscribers. When asked how they grew their email subscription list, 95 percent said that they use their website. More than 65 percent of respondents said they purchase or rent lists from a vendor in addition to the list they owned.

Only six percent of respondents email their entire list daily, while 39 percent email their entire list once per week. Most companies report sending emails to a portion of their list approximately once per week.

An open-end response from the survey reflected a common challenge among SMBs trying to determine how often to send emails, “The biggest debate is how frequently to send our mass-marketing emails. Currently, we send everyday, which, several people feel is too frequently. However, with each send, we see it drive revenue and if we lower the send rate the revenue drops.”

Metrics Used to Measure Success

Of the thirteen individual email marketing metrics listed in the survey, companies are most likely to use click-through rates, the amount of traffic an email drives to a website, and the number of leads it generates to measure success. Sales and revenue are also a common metric used to determine whether or not an email is successful. Few companies use cost as a metric, even though email marketing accounts for the largest share of their marketing budget.

In review

One of the most interesting findings of the survey was the inconsistency between confidence in email marketing and the perceived effectiveness of email marketing. When asked how confident they were in their organization’s ability to put together the best possible marketing strategy for a specific medium, respondents ranked email marketing third over a number of other marketing tactics, including social media, print ads, direct mail, online display ads, and SEO. But, when asked about the effectiveness of their marketing efforts, email marketing ranked ninth on the list.

iContact published a report last week, outlining key findings from the survey. While the report confirmed there was no one-size-fits-all solution when determining how much to spend on email, it did reiterate the importance of defining email marketing budgets based on the number of meaningful, targeted communications a company can send to their list, and the anticipated return on investment.

According to iContact’s report, if companies want higher open, click-through, and conversion rates, they must ensure that they are sending only relevant, timely and engaging emails.